Archive for the ‘Uncategorized’ Category

The financialization of America was a conscious decision by the oligarchs. They controlled the issuance of credit. They controlled the currency and level of inflation inflicted upon the masses. They controlled the corporations selling consumer goods on credit. They controlled the Congress, courts, and government agencies with their deep pocket lobbying and buying of influence. Lastly, they controlled the media messages and molded the opinions and tastes of the masses through their Bernaysian propaganda techniques perfected over the decades. In one of the boldest and most blatant acts of audacity in world history, the Wall Street/K Street oligarchs wrecked the world economy in their insatiable thirst for profits, shifted their worthless debt onto the backs of taxpayers and unborn generations, threw senior citizens and savers under the bus by stealing $400 billion per year of interest from them, and enriched themselves with bubble level profits and bonus payouts. Meanwhile, median household income continues to fall, real GDP is stagnant, true unemployment exceeds 22%, and 47 million people are living on food stamps.
–Jim Quinn of The Burning Platform blog, Oct 8, 2012, excerpt (brilliant) article, “Decline, decay, denial, delusion, and despair”

The policy of the Status Quo since 2008 boils down to this assumption: if we prop up an artificial economy long enough, it will magically become real.This is an extraordinary assumption: that the process of artifice will result in artifice becoming real. This is the equivalent of a dysfunctional family presenting an artificial facade of happiness to the external world and expecting that fraud to conjure up real happiness. We all know it doesn’t work that way; rather, the dysfunctional family that expends its resources supporting a phoney facade is living a lie that only increases its instability.
–Charles Hugh Smith from Of Two Minds, October 2, 2012, excerpt article, “If You Prop Up An Artificial Economy Long Enough, Does It Become Real?”

There is no nonsense so errant that it cannot be made the creed of the vast majority by adequate governmental action.
–Bertrand Russel

“Capitalism is a vehicle that helped bring the banksters to absolute power, but they have no more loyalty to that system than they have to place, or to anything or anyone…they think on a global scale, with nations and populations as pawns. They define what money is and they issue it, just like the banker in a game of Monopoly. They can also make up a new game with a new kind of money. They have long outgrown any need to rely on any particular system in order to maintain their power. Capitalism was handy in an era of rapid growth. For an era of non-growth, a different game is being prepared.”
–Richard K. Moore, Thunder Road Report, Dec 19, 2011

At a time of universal deceit, telling the truth is a revolutionary act.
–George Orwell

Not ignorance, but ignorance of ignorance, is the death of knowledge
–Alfred North Whitehead

Corruptissima republica, plurimae leges (The more corrupt the state, the more laws)
–Tacitus

“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
–Ludwig Von Mises

The US has been led down a dark alley and strangled in what history may recognize as a financial coup d’etat, and a campaign of economic war against the common people.
– Jesse, at Cafe Americain

The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it.
–John Kenneth Galbraith

If liberty means anything at all, it means the right to tell people what they do not want to hear
–George Orwell

“Politics is the gentle art of getting votes from the poor and campaign funds from the rich by promising to protect each from the other.”
–Oscar Ameringer

When the people lose faith and don’t know what to believe in, they don’t believe in nothing, they believe in anything.
–Eric Janszen

Some ideas are so stupid only an intellectual can believe them
–George Orwell

Some people say that Americans are ignorant and apathetic. But I don’t know and I don’t care.
–joke, provenance unknown

The hottest places in hell are reserved for those who remain neutral in time of great moral crisis.
–Dante Alighieri

A constant in the history of money is that every remedy is reliably a source of new abuse
–John Kenneth Galbraith

The only time a nation destroys itself is when it becomes efficient in enforcing mediocrity.
– Lyndon Larouche

What will collapse really be like? I expect the event will be spectacular in some ways, but subdued and subversive in many other ways. Triggers may be swift and startling, but the reactions of the populace slow, uncertain, and presumptive. There will be fissures in our foundation, but the complete extent of the danger may take a few more years to become evident. While the public continues to maintain its fixation on some Mad Max nightmare scenario, the real collapse will be taking place right under their noses in the form of 25%-50% increases in food and fuel, tightened job availability with pensions swallowed by austerity, food lines hidden by food stamps until the government finally defaults and pulls the rug out from under entitlement programs, etc. For a time, it will look and feel like a slightly darker version of today, and not the cinematic melodrama that we have come to envision. The worst of times that we often find extolled in the pages of history books come at the cost of years of almost equal disparity, and usually, the lead up is far more difficult to handle than the finale…
–Brandon Smith from Alt-Market, August 6, 2012, excerpt article, “Has the perfect moment to kill the dollar arrived?”

And a short, short story:

It is the month of August, on the shores of the Black Sea. It is raining, and the little town looks totally deserted.

It is tough times, everybody is in debt, and everybody lives on credit.

Suddenly, a rich tourist comes to town.

He enters the only hotel, lays a 100 Euro note on the reception counter, and goes to inspect the rooms upstairs in order to pick one.

The hotel proprietor takes the 100 Euro note and runs to pay his debt to the butcher.

The Butcher takes the 100 Euro note, and runs to pay his debt to the pig grower.

The pig grower takes the 100 Euro note, and runs to pay his debt to the supplier of his feed and fuel.

The supplier of feed and fuel takes the 100 Euro note and runs to pay his debt to the town’s prostitute that in these hard times, gave her “services” on credit.

The hooker runs to the hotel, and pays off her debt with the 100 Euro note to the hotel proprietor to pay for the rooms that she rented when she brought her clients there.

The hotel proprietor then lays the 100 Euro note back on the counter so that the rich tourist will not suspect anything.

At that moment, the rich tourist comes down after inspecting the rooms, and takes his 100 Euro note, after saying that he did not like any of the rooms, and leaves town.

No one earned anything. However, the whole town is now without debt, and looks to the future with a lot of optimism.

And that, ladies and gentlemen, is how the governments of the world are doing business today.

JUST TO SAY TO ALL YOU FAITHFUL SUBSCRIBERS, and the hangers-on, and all the others, that Quantum Pranx will be taking a well-earned rest for a couple of weeks, starting about now… So nothing new or topical will be coming onstream in that time, but please feel free to trawl the archives. You might find an interesting or challenging article to rearrange your critical faculties, or else get you reaching for the loaded emergency pistol that you keep close by in a handy drawer… Of course, we are all well aware of a somewhat critical time frame coming up (yes, of course, it came up a long while back): the Greek crisis, the Eurozone crisis, the U.S. deficit crisis, the dollar crisis, the end of the road crisis, the future of the world crisis, blah blah. Yeah, well, that’s why QP is taking some time off… Stay safe, stay sane. –Aurick

THIS PAST WEEK THERE WAS ALL SORTS OF GOOD NEWS about the economic recovery spinning forth from National Public Radio. In a sure sign the recovery is moving forward, Obama has decided to replace his recovery oversight team with some sort of a new job creation team. Apparently the recovery process is forging full steam ahead in the housing sector as well, with home sales on the rise nationwide. Now, increased sales would have nothing to do with the fact that there’s an unprecedented wealth of repossessed property hitting the market with hugely eroded value, of course… or that excessively positive spin from the media is influencing investor buying?

The media seems desperate to report something positive about the economy these days. I understand the draw. People are tired of the bad news and the tough times. The idea that things could get worse or go on like this for much longer is frightening. But isn’t the function of journalistic reporting to cut to the truth of the matter?

I am coming to completely distrust anything positive I hear from the mainstream, even NPR. The atmosphere is verging on Orwellian these days, but with the ludicrous conflict of interest at play regarding sponsors such as the National Association of Realtors backing public radio and the commercial media already beholden to the designs of big business, it only stands to reason we are not going to get a clear picture of where the economy stands.

Surprisingly, one recent article from CNBC did manage to cut through the chatter with a title declaring Housing Market Slips Into Depression Territory. The article itself was perhaps not wholly accurate as it described the economy as revving back to life with “signs of hiring on the horizon.” That remains to be seen. I suppose it depends on the distance of that horizon, but I don’t expect to see any bold improvement for a while without the development of some amazing new energy technology or such to drive it. Nonetheless, it was refreshing to have the press acknowledge the severity of the situation we are steeped in.

According to the CNBC article, home values have now seen a worse decline than they did during the Great Depression, having hit a 26% reduction nationwide with home prices still falling. While it wasn’t addressed in the article, the housing market and the investments attached to it are what led us into this downturn, and falling prices continue to put downward pressure on the greater economy. The fact that housing is now worse off than it was during the Great Depression suggests our economic engine may not be revving back to life with quite the verve the press would have us believe.

I suppose it is wise for the press to be careful. If you subscribe to the school of behavioral economics you understand the influence emotion and attitude have on the market, and it can be argued that this is just cause for prudence in reporting. However, there are multiple and very reputable economists, investors, analysts and scholars alike who are calling the situation we’re in a depression.

Nobel Prize recipient and Professor of Economics at Princeton University, Paul Krugman, warned in a New York Times article published last July, “We are now, I fear, in the early stages of a third depression.” Though he has since come to believe the severity of the downturn was tamed to some degree by fiscal stimulus, he again referred to the economy just yesterday on his Conscience of a Liberal blog as being in a depression.

Last month 87-year-old promoter, trader and investment letter author Harry Schultz warned in his final issue of the International Harry Schultz Letter “Roughly speaking, the mess we are in is the worst since the 17th century financial collapse. Comparisons with the 1930’s are ludicrous. We’ve gone far beyond that.” He should know, having grown up during the Great Depression.

by Jim QuinnPosted originally on 29th December 2010
on The Burning Platform

The storyline being sold to the American public by the White House and the corporate mainstream media is that the economy is growing, jobs are being created, corporations are generating record profits, consumers are spending and all will be well in 2011. The 2% payroll tax cut, stolen from future generations to be spent in 2011, will jumpstart a sound economic recovery. Joseph Goebbels would be proud.

It was another wise old man named Ben Franklin who captured the essence of what those in control are peddling: “Half a truth is often a great lie.”

The economy is growing due to unprecedented deficit spending by the government, fraudulent accounting by the Wall Street banks, and with the Federal Reserve buying $1.5 trillion of toxic mortgage “assets” from their Wall Street owners, plus various home buyer and auto tax credits and gimmick programs, and Fannie, Freddie, and the FHA accumulating taxpayer losses so morons can continue to purchase houses.

Jobs are being created. According to the BLS, we’ve added 951,000 jobs since December 2009, an average of 79,000 per month. Of course, the population of the US is growing at 175,000 per month. It seems that there are millions of jobs being created, just not here as shown on these graphs from the NYT.

The storyline of corporate profits is true. As a percentage of national income, corporate profits are 9.5%. They have only topped 9% twice in history – in 2006 and 1929. When you see the paid Wall Street shills parade on CNBC every day proclaiming the huge corporate profit growth ahead, keep these data points in mind. Do profits generally rise dramatically from all time peaks?

You might ask yourself, if corporations are doing so well how come real unemployment exceeds 20%? The answer lies in who is generating the profits and how they are doing it. It seems that the fantastic profits are not being generated by domestic non-financial companies employing middle class Americans producing goods. Pre-tax domestic nonfinancial corporate profits are not close to record levels as a share of national income. They exceeded 15% of national income once in the late 1940s, and repeatedly topped 12% in the 1950s and 1960s; in the third quarter of this year, they were 7.03% of national income. I wonder who is making the profits.

[Slightly dated – 3 months is a lifetime these days – but superb research and journalism make this a Must-Read! Aurick]

OUR CURRENT ECONOMY IS A SHELL GAME. A grand fraud designed to siphon more and more tangible wealth (not fiat wealth) from the average person and transport it post-haste into the silk lined pockets of a corporate banking minority. The goal? To reduce the self sufficiency of American citizens to the point of total fiscal and social dependence on the top 1% richest men in the world. Conspiracy theory?

Not in the slightest. Just a cold hard fact of history. “Feudalism” is, sadly, rampant in the annals of human culture. Anyone who believes that our modern era is somehow different is simply fooling themselves. Elitists seek power over others, they always have and they always will, and, the most efficient way to gain control over the lives of the masses is through engineered imbalances in economy.

Every time you hear the term “bailout”, or “quantitative easing”, just think “wealth transference”. Every dollar that is printed from thin air by the private Federal Reserve and handed to a globalist entity like Goldman Sachs or AIG through our Treasury represents yet another dollar of debt (and another percentage of interest) that you, the U.S. taxpayer, and your children, are expected to eventually pay for without ever seeing any benefits. Right now, at this very moment, you and your descendents for generations to come are being enslaved by forcefully imposed usury. Our country has been “volunteered” for a financial debasement on a scale that dwarfs the Great Depression or even the Weimar catastrophe. We ignore this reality at our peril.

Since the initial meltdown began in 2008, we have seen two and a half years of stall tactics and skewed statistics designed to prolong total collapse while central banks position themselves for optimal gain. Simultaneously, the concrete underlying factors of our economy, including employment and purchasing power, have gone down the tubes. True, the system was an illusion long before its many flaws were openly revealed, and it needs to be dissolved, but should it be dissolved to the advantage of the elites who designed its flaws in the first place, and to the detriment of the rest of us? I think not…

Today, as Autumn 2010 begins to settle upon us, many notable and even dire trends are beginning to break the surface of the water and circle the sinking wreckage of our financial system. I believe these factors signal an extreme acceleration in the possibility of “trigger events”, which we have discussed in previous articles, and herald a new dynamic, a process that will directly contribute to a final breakdown of the present system. Let’s examine these trends now…

Dow Bubble Until November Elections?

If you look back at the history of economic collapses across the world, you’ll find a strange and ironic constant preceding most breakdowns; the disproportionate values of stocks and securities when compared to actual profits and consumer activity. The Great Depression saw record breaking rallies in the Dow and relentless financial propaganda claiming recovery was imminent just before total derailment. In many cases, investor confidence seems to be most heightened just before a brutal plunge. Perhaps it’s the power of reactionary denial, or maybe it’s the increase in false data supplied by establishment economic goon squads.

September has seen a very uncharacteristic stock rally, especially considering the fact that U.S. poverty levels are now at a 15 year high:

The WikiLeaks controversy speaks to Imperial Hubris and insecurity; we have forgotten that the U.S.A. stands separate from the American Empire.

A number of readers have asked me to comment on WikiLeaks and the release of “secret” diplomatic/government cables and documents. (How “secret” were they if up to 3 million people had access to them?) I am going to connect a number of issues here by identifying the core contexts of the WikiLeaks controversy.

That every nation requiries diplomacy and a diplomatic corps is not in question, nor is the need for confidentiality in pursuing diplomacy. The need for Armed Forces to defend the nation against aggression is also not in question. What is in question is whether the American Empire is acting in the best interests of the U.S. and its citizenry.

1. The U.S. operates the sole Global Empire on the planetThe words “American Empire” offends some readers, who claim “That’s not what America is about.” You can make up your own version of what America’s about, but you cannot deny the existence of the Empire unless you insist on ignoring facts.

As I wrote in Survival+, I make no value judgment in describing the American Empire–it is simply a fact that no other nation has the military, diplomatic, intelligence and financial reach of the U.S.

When I describe the small portion of the Empire which is visible to those of us without security clearances, I get emails (some from veterans) accusing me of “saber-rattling.” I do not intend a value judgment, yet simple statements of fact are obviously triggering emotional responses.

Other readers are offended that the U.S. hasn’t yet crumbled, and they list various strengths of China and Russia in an attempt to discount the Empire’s scope and scale.

Once again: the American Empire is simply a matter of record. To deny its existence, to claim that the mere description of it is saber-rattling, to assert that China and Russia are almost as powerful as the Empire – these are value judgments and wishful thinking. I look at the U.S. Empire the same way as I do the Roman Empire: it was a real structure, and whether it was “good” or “bad” is another matter altogether.

China and Russia are land powers, the U.S. is a global maritime power. The navies of China and Russia are designed not to project power but to thwart the power projection of the U.S.

Neither China nor Russia have the capabilities to project power beyond their borders. If Canada stops exporting shale oil to China, there is nothing China can do to force Canada’s hand except bluster.

China and Russia have long borders with potentially hostile states. The U.S. does not.

Historically, China and Russia possessed land empires. The U.S. has historically been a maritime, trading/mercantilist nation.

2. World War II forced the U.S. into global geopoliticsThe U.S. began as a weak, vulnerable maritime nation focused on trade. It’s foreign policy was simple: promote trade, limit permanent alliances, avoid “foreign entanglements,” and deter European interventions in the Americas.

In 1940, the American people remained solidly isolationist. They wanted no part in the wars that were enveloping Europe and Asia. It required setting up Japan to be the aggressor against the U.S. to trigger America’s entrance into global war. The American Power Elites were awakening to the uncomfortable realization that what happened in Europe and Asia could eventually impact the U.S.

The U.S. had dabbled in Imperialism, taking control of Spain’s old Imperial holdings in the Philippines and the Caribbean via the “Splendid Little War” of 1898, but there was significant domestic opposition to such global meddling; even the President was appalled by the annexation of Hawaii by American residents’ force of arms.

This discomfort with global Empire evaporated in the titanic struggle to defeat the German and Japanese Empires. Once the war was won, America tried to return to its isolationist past; the military rapidly demobilized, maintaining a large force only in Europe to defend against Soviet expansion. The Soviet’s acquisition of nuclear weapons and German missile technology changed the context irrevocably; now the Pacific and Atlantic oceans were no longer bulwarks against attack.

The context of the Cold War was fundamentally military, with a generous side helping of diplomacy and propaganda to win or defend allies against the Soviet Bloc. Intelligence, especially photo and signal intelligence, became of paramount importance, as the secretive Soviet and Chinese societies left few transparent clues about their leaderships’ intentions or their capabilities.

With the advent of the Corona/Keyhole photo satellites, the U.S. began to receive useful intelligence from space-based assets. The U.S. continues to devote massive resources to signal collection intelligence.

For more on the U.S. intelligence gathering capabilities, please see The Satellite Wars. To say we civilians have little idea of the scope of such operations is an understatement.

This context remains in place today. The American Power Elites retain the Cold War context of military superiority, global intelligence and signal gathering and diplomatic efforts to set the agenda. (Foreign policy of the United States.)

As a result, it seems entirely “conventional” for the U.S. to spend $1 trillion prosecuting military campaigns in Iraq and Afghanistan, and hundreds of billions more on GWOT (global war on terror) and a vast, shadow Empire of signal collection and analysis.

Recently, William Black has more or less pointed out the same thing, as reported by Mish Shedlock, August 14, here: With the financial industry having pressured Congress, the accounting rules have been softened to the point where they cannot discern a healthy bank from an insolvent one. Hence, zombie banks, and a Japanese-style lost decade.

In 1982, many of the banks hit by the Latin American debt crisis were effectively insolvent. Paul Volcker, as the then-Chairman of the Federal Reserve—charged with overseeing the banking system—effectively cast a blind eye on this banking insolvency.

Volcker’s reasoning seems to have been that the US banks were not broke—they were just getting temporarily squeezed. Volcker seems to have concluded that time would heal the balance sheet wounds caused by the Latin American defaults. Therefore, to hold the banks to the letter of the accounting rules would likely drive one or more of them broke, to no useful purpose—and it could potentially cause a bank panic and general financial crisis. But to pretend (for a while) that all was right with the US banks would avoid a potential panic—so long as the crisis sorted itself out and the banks repaired themselves by writing off and renegotiating their toxic Latin American debt.

Volcker gambled, and won: The US banks indeed took the Latin American debt hit, but grew their way out of their hole. None of the large American banks were pushed to bankruptcy in 1982, and by 1983, the worst had passed. By 1984, the biggest chunks of Latin American debt had either been renegotiated or written off—so far as the American banking system was concerned, the crisis was over, with not a single name bank going broke. And most importantly, stability and calm reigning all the while. Score for Volcker and what we could say was the Volcker Call.

In 2008, when Lehman went bankrupt because of all the “toxic assets” on its balance sheet, the severe credit crisis that happened as a result was because everyone realized that Lehman was the canary in the coal mine. All of the American banking system was insolvent, for more or less the same reason: Assets on their books simply were not worth anything close to their nominal value. These assets were clustered around CDO’s, mostly in the real estate and commercial real estate markets.

To relieve the credit crunch that peaked in September, 2008, the Federal Reserve Board opened the money spigots—all kinds of lending windows were opened, with a dizzying array of acronyms, all of them doing basically the same thing: Lending out wads of cash at zero interest to the American banking system, all in an effort to keep it from going broke.

Between September, 2008, and March 2009, the Fed backstopped the entire US banking system—but it still wasn’t enough. The losses were too great, the holes in the balance sheets too big. So on April 2, 2009, a key FASB rule was suspended: Specifically, rule 157 was suspended, related to the marking of assets to market value—the so-called “mark to market” rule.